On Monday, Microsoft announced a shift towards games after marketing the Xbox One as an all-purpose entertainment system last year. It unveiled nearly two dozen games including an addition to the popular "Halo" series. Similarly, Nintendo focused on games including "SuperSmash Bros" and the eight-player action game "Splatoon".

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Visitors play video games on Sony Computer Entertainment Inc. PlayStation 4 (PS4) video game consoles during a preview event at the Sony showroom in Tokyo, Japan.

In addition to games, Sony unveiled refreshed hardware for its PlayStation 4 (PS4) and a series of ambitious projects including an online game-streaming service "PlayStation Now" and a streaming device "PlayStation TV".

However, the latest lineups may not be enough to fend off the challenge from mobile and other smart devices.

According to Sizemore, low-end gaming on smart devices is encroaching on the gaming console space. Consoles currently account for 65 percent of the gaming market while smart devices account for nearly 15 percent, he added.

"For a lot of casual gamers, the iPad's offerings are more than sufficient. The other selling points, like the ability to stream Netflix, matter lesser by the day as these services get commoditized across cheap devices," said Sizemore.

Other analysts say video game consoles may no longer be relevant in 5 years' time.

"With Sony bringing out 'PlayStation TV' which plays games decently and going into cloud services, the clock is ticking. We are entering a window where it will be increasingly difficult for consumers to buy an expensive gaming device which isn't mobile," said Rob Enderle, principal analyst at the Enderle Group.

Among the main players, Sony's PS4 outperformed selling over 7 million units in five months, while Microsoft's Xbox One sold over 5 million units. Both consoles were released last November. Nintendo's Wii U lagged, selling just 6.17 million units since its launch in November 2012.

Alan Bowman, Regional VP of Retail Sales and Marketing at Microsoft told CNBC Asia's Squawk Box on Tuesday: "A lot of people spoke about the console business being dead and bare (but) it's far from that. For Xbox one, we've grown 76 percent faster than we did on Xbox 360, which was the leading console for us. So there's a lot of momentum in the market."

"Three years ago, the industry was asking if there would be a new generation of consoles and here we are with strong sales of new devices at the start of a new console generation. It is clear that the landscape for games consumption is far more competitive and complex now," Piers Harding-Rolls, Director and Head of Games at IHS Technology said in an email to CNBC.

"There will always be demand for AAA blockbuster games," he added. "If consoles remain the place to experience those games, they will be in demand."